Wednesday, December 06, 2017

Santa baby, don’t forget the STB

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Santa baby, don’t forget the STB

For 54 weeks beginning in 2003, Roger Nober was the lone member of the Surface Transportation Board (STB), tormented that if he discussed cases with himself he would violate the Government in Sunshine Act, which prohibits a quorum from discussing anything of substance outside a properly noticed public meeting.

Nober’s legal counsel concluded the law permitted a body of one to decide cases. Nonetheless, those decisions bind parties for decades, and surely corrupt the spirit of the law and the purpose of a multi-member independent regulatory agency.

It may be déjà vu again. Although the 2015 Surface Transportation Board Reauthorization Act increased the number of STB voting members from three to five, the two new seats have yet to be filled.

In September, STB Chairman Dan Elliott, a Democrat, resigned, creating a vacancy; and the term of Democrat Deb Miller expires Dec. 31. While the statute permits her to remain for a holdover year while awaiting her own or another’s White House renomination and Senate reconfirmation, there are indications she may depart ahead of new members being Senate confirmed. That would leave the STB in the same position as in 2003—this time with Republican Ann Begeman the lone voting member.

Perhaps President Obama, expecting a Hillary Clinton victory in 2016, permitted the two new seats created in 2015 to remain vacant for Clinton to fill. While President Trump’s attention may be diverted by events domestic, international and personal, the identification and selection of qualified nominees is a task for the Senate leadership and White House advisers.

The reason may well be that in official Washington, STB name recognition ranks even below that of the Jamaican National Bobsleigh Team. Yet to paraphrase Daniel Webster’s celebrated Supreme Court oration, “It is a small agency, but there are those of us who love it”—and surely that includes the detachment of commerce attorneys covetous of the interminable fee-churning case of Jarndyce v. Jarndyce found on the pages of Charles Dickens’ “Bleak House.”

Thomas Jefferson’s notion that “merchants will manage the commerce the better the more they are left free to manage for themselves,” has few fellow travelers among commerce attorneys and their shipper clients lacking effective transportation alternatives. They are beseeching the White House and Senate Commerce Committee to get-on with the task of filling the STB’s vacant seats.

Here is what CAN happen:

As Republicans control the Executive Branch, the now five-member authorized STB is entitled to a three-person Republican majority. As Republican Begeman’s term does not expire until Dec. 31, 2020, two other Republicans can claim STB seats.

As Democrat Miller may remain into her 2018 holdover year, one other Democrat can now claim an STB seat. Miller also could be changed out for a second Democrat.

It has been evident that Miller is frustrated with the Board’s inattention to policy issues, such as a congressional directive to pursue alternatives and improvements to the problematic stand-alone cost (SAC) test that determines the reasonableness of shipper-challenged rail rates. Also lying dormant within the STB are efforts to redefine the tools and methods for determining railroad revenue adequacy, plus the standards and procedures for determining rate reasonableness when railroads achieve revenue adequacy, and whether shippers lacking effective transportation alternatives to a single railroad should be permitted access to a competing railroad within a to-be-defined distance (competitive switching, alternatively called “forced access” by railroads).

Miller hints she would seek a second term only if convinced that still-to-be named nominees reflect a commitment to engage on policy rather than barely nibbling around the edges. Actually, the choice to remain may not be Miller’s. As railroads are content with the status quo, they have the means, motive and opportunity to lobby for a preferred Democratic successor.

STB observers also should take heed that in Washington’s currently toxic political environment, with Republicans controlling the Executive and Legislative Branches, there could result an STB of just three Republicans—possible and lawful, but improbable.

There is chatter among insiders of at least one Republican nomination before month’s end, with the expectation the Senate Commerce Committee would delay a confirmation hearing pending a Democratic nomination early in 2018. Chairman John Thune (R-S.D.) is not one to pick a political fight unnecessarily. Successful passage of this initiated 2015 Surface Transportation Reauthorization Act required and received bipartisan support.

Moreover, Senate Minority Leader Chuck Schumer (D-N.Y.) has the ability to place a hold on nominees from receiving a Senate floor confirmation vote—no matter the recommendation of a Senate committee—as Schumer has done with Ron Batory’s nomination to the Federal Railroad Administration.

While Senate Majority Leader Mitch McConnell (R-Ky.) possesses what is called the “nuclear option”—a parliamentary means to unblock a blocked nomination, which McConnell used to confirm Derek Kan as Undersecretary of Transportation for Policy—he has not used it to unblock Batory, and is seen as unlikely to use it for an STB nominee.

Of course, there is the ability of President Trump to make a constitutionally permitted recess appointment, presumably of a Republican to the STB—and even of Batory to the FRA. Such a decision by the President presumably would not be stymied by McConnell. This is something to consider when the Senate goes into its year-end recess later this month.

So, who is waiting in the wings for an STB nomination? The list of those reportedly under consideration is approaching the population of Tuna, Texas—and never be surprised that an unidentified probable is reading this list, gleeful they have managed a stealth profile, so far.

THE REPUBLICANS

PATRICK FUCHSPATRICK FUCHS, age 30, rouses constant chatter among railroad and shipper lobbyists—as much over expectations he will be nominated to the STB as his Senate Commerce Committee staff work under Sen. Thune’s tutelage

Fuchs was a co-author of the Surface Transportation Board Reauthorization Act; the rail title of the Fixing America’s Surface Transportation (FAST) Act, which included language pertaining to Amtrak, federal loan programs and rail safety; and legislation affecting Positive Train Control and hazmat safety.

Fuchs has demonstrated a technical interest in policy issues before the STB, such as alternatives to the long-maligned SAC test, and data quality of the Uniform Rail Costing System (URCS) and the STB’s waybill sample.

He has held positions in the Executive Branch Office of Management and Budget, the Government Accountability Office, the National Center for Freight and Infrastructure Research and Education, and was a Presidential Management Fellow with the State Department. He is active with the Transportation Research Board of the National Academy of Sciences, for which he has written research papers.

If nominated and confirmed, Fuchs would be the second youngest member of the 130-year old STB and its Interstate Commerce Commission (ICC) predecessor. Heather Gradison was 29 when confirmed and named chairman by President Reagan in 1982. William Clyburn was 32 when given a recess appointment to the STB by President Clinton in 1998.

Fuchs earned from the University of Wisconsin an undergraduate degree in economics and political science, and a master’s in public policy with an emphasis on quantitative analysis.

KEITH HARTWELLKEITH HARTWELL, age 68, is chairman emeritus and a founder in 1972 of the government affairs consultancy Chambers, Conlon and Hartwell, which specializes in regional and short line railroad creation, development and finance.

On behalf of the American Short Line and Regional Railroad Association, he organized the first Railroad Day on Capitol Hill, and led initial legislative efforts to obtain for short line railroads an investment tax credit whose periodic reauthorizations have had record numbers of co-sponsors. Hartwell’s recurring message to lawmakers is that “short line railroads are small businesses that work in the real world.”

He is a self-described “specialist in the writing and processing of transportation grant and loan applications” funded by the Railroad Rehabilitation and Improvement Financing (RRIF) program, created by Congress in 1976 as a self-perpetuating source of loans for capital improvements and acquisitions.

Hartwell is steeped in the economics and mechanics of rail mergers, having advised Canadian National Railway during its acquisition of Illinois Central, and Norfolk Southern during its joint acquisition with CSX of Conrail.

Early in his career, Hartwell was a legislative staff director for the Michigan State Senate and an administrative assistant to the late U.S. House member Marvin L. Esch (R-Mich.). He earned an undergraduate degree in political science from the University of Michigan.

MARK L. BURTONMARK L. BURTON, age 58, is a career academic heavily focused on research into railroad economic issues. Since 2004, he has been director of transportation economics at the University of Tennessee’s Center for Transportation Research, and an associate professor of economics.

Burton was a consultant to the Ohio Attorney General on the competitive effects of the CSX-Norfolk Southern acquisition of Conrail; to the Association of American Railroads and Norfolk Southern on theoretical and applied economics; and was employed in the Burlington Northern Railroad Law Department during the early and mid-1980s prior to pursuing doctoral studies in economics.

His published research has included analysis of railroad deregulation, capital investment, tax policy, network pricing, intermodal efficiency, public-private partnerships, and methods of revenue adequacy determination. Burton is a member of the Rail Freight Transportation Committee and the Agricultural Transportation Committee of the National Academies of Science’s Transportation Research Board. His presentations at an annual Georgetown University transportation seminar have been attended by members of the STB and its Office of Economics.

Burton earned an undergraduate degree in economics from the University of Missouri, and a Ph.D in economics from the University of Tennessee. His doctoral dissertation in 1991 focused on the interaction of railroad economic deregulation and rail rates.

DANIEL L. GURLEYDANIEL (DAN) GURLEY, age 53, has long been involved in Republican politics in his native North Carolina as a state field director, political director and executive director, and was chief of staff to the late Rep. Cass Ballenger (R-N.C.). Gurley later was deputy political director and national field director for the Republican National Committee. He currently serves on the board of the North Carolina State Ports Authority.

Gurley has long held an interest in railroad policy and safety, and since 2007 has served as regional director for GoRail, which advocates a variety of pro-rail freight and passenger policies. He was employed as director of industry relations by the Association of American Railroads’ information technology subsidiary, Railinc, based in Cary, N.C. In that capacity, Gurley provided training to CSX, Kansas City Southern, Union Pacific and short lines in the use of Railinc products. He later was a founding partner of a government affairs consultancy in Raleigh, which includes a transportation practice.

Gurley earned undergraduate degrees in political science and public relations from Appalachian State University.

THE DEMOCRATS

MARTIN MARTY OBERMANMARTIN J. (MARTY) OBERMAN, age 72, is an attorney, former Chicago alderman and former board chairman of Chicago Metra. Metra operates seven commuter routes (through its subsidiary, Northeast Illinois Regional Commuter Rail Corp.) and contracts with BNSF and Union Pacific for operation of four others—service that, combined, serves 241 stations in Chicagoland and carries the fourth largest commuter ridership in the nation.

Oberman was first named to the Metra board, whose members represent Chicago and surrounding counties, in 2013 by Chicago Mayor Rahm Emanuel. Following a financial scandal involving Metra full-time officers, Oberman was elevated by fellow board members to chairman in early 2014, with a mandate to guide the repair of Metra’s reputation and improve transparency, which the Chicago Tribune said he accomplished. He voluntarily stepped down in mid-2017 with accolades for his consensus building skills.

Earlier in his career, as general counsel to the Illinois Racing Board, Oberman won acclaim for successfully investigating and prosecuting corruption. Upon his retirement, the Metra board cited his “long career as a leader of the reform effort in politics.”

Oberman practiced law with a firm later merged into Sidley & Austin; the latter with a significant railroad practice, but Oberman never represented railroad clients. He later opened his own private practice. Oberman was a U.S. House of Representatives Page at age 13, attended military school, earned an undergraduate degree in psychology from Yale, and a law degree from the University of Wisconsin in 1969.

MARGARET REAMY ANCARROWMARGARET REAMY ANCARROW, age 66, was an attorney adviser and chief counsel to former STB Chairman and Democrat Dan Elliott from November 2009 to February 2014.

Elliott recruited her from outside the STB. She had extensive experience in legal matters involving energy, environmental, transportation and postal issues. She had wanted to work in the federal government. 

The Journal of Commerce reported in 2009 that prior to being hired by Elliott, Ancarrow “participated in administrative trials, hearings and rulemakings before the Federal Energy Regulatory Commission, Interstate Commerce Commission, Department of Transportation, Environmental Protection Agency and state regulatory agencies.” Earlier in her career, she was special assistant to the Department of Energy’s general counsel.

After departing the STB in late 2014, Ancarrow returned to private practice, focusing, she says, on “transportation matters related to the Surface Transportation Board and Department of Transportation.” She was renting office space from a law firm that represents self-described captive shippers, but vacated that rented space shortly before Elliott resigned from the STB in September, then creating a Democratic-seat vacancy at the STB.

Ancarrow earned an undergraduate degree in political science and government, and a law degree, both from the University of Virginia.

DAVID MATSUDADAVID MATSUDA, age 45, is a familiar name in Washington and among those focused on transportation policy and regulation. For four years beginning in 1998, he was a Federal Railroad Administration attorney engaged in writing and enforcing safety regulations.

He later was a Senate Commerce Committee staff member, and from 2004-2009 was senior counsel and primary transportation adviser to the late five-term Sen. Frank Lautenberg (D-N.J.), best known for his passenger rail advocacy. Beginning in 2009, Matsuda was acting assistant secretary for transportation policy at the DOT; deputy maritime administrator; and from 2010-2014, administrator of the Maritime Administration.

Matsuda earned an undergraduate degree in engineering from Harvey Mudd College, and a law degree from the University of San Diego. Recently, he has operated a consultancy in Washington, D.C. Politico magazine reported that the ringtone of his cellphone is a train horn.

CLYDE HARTCLYDE J. HART JR., age 71, spent most of his career immersed in rail regulatory and legislative issues. Following private law practice specializing in antitrust and transportation issues, Hart was a trial attorney and senior counsel for STB predecessor Interstate Commerce Commission. In 1994, he was recruited by Senate Commerce Committee Chairman Fritz Hollings (D-S.C.) as the committee’s senior Democratic counsel, where he helped to draft the 1995 Interstate Commerce Commission Termination Act that created the STB and its revised mission to focus almost exclusively on rail economic regulation.

Hart subsequently was Senate-confirmed as Maritime Administrator, with a mandate to promote seamless integration of waterborne transportation with other modes; and then was Senate-confirmed as the first administrator of the Federal Motor Carrier Safety Administration, which regulates trucking safety. For nine years, Hart served on the board of directors of Operation Lifesaver, the highway-rail grade-crossing safety organization

In 2015, Hart retired after 14 years as senior vice president for government affairs and policy at the American Bus Association, where he earned a “Lobbyist of the Year” award from The Hill newspaper, which reports on Congress and federal agencies.

Hart earned an undergraduate degree in history and political science from St. Peter’s College, a master’s in public policy from George Washington University, and a law degree from Catholic University of America.

ANTHONY HATCHANTHONY (TONY) HATCH, age 57, is a career surface freight transportation analyst and consultant, whose past clients have included the Association of American Railroads. His more than 25-year Wall Street career included posts with Salomon Brothers, Argus, PaineWebber and NatWest Markets. Since 1999, he has worked independently. Recently, Hatch expanded his services to provide due diligence to new forms of transport investment such as public/private partnerships and hedge funds in areas of rail maintenance and construction.

Hatch has taken strenuous stands against what he terms “reregulation,” saying, for example, “Regulations, whether coming by law or regulatory body, even on the bulk commodities, cap railway return-on-investment and offer the strongest possible incentive to disinvest.” In an opinion article published by the Washington Post, Hatch wrote, “The industry is under threat from U.S. regulators … At issue is a proposal from a small group of rail customers seeking to lower the price they pay for freight rail service under the guise of competition.”

Should Hatch be nominated and confirmed, he likely would be pressured to recuse himself from many, if not most, STB rulemakings and rate cases as he has expressed pro-railroad opinions on virtually all issues before the STB.

Hatch earned an undergraduate degree in American history from Harvard College.

JENNIFER ESPOSITO HOMENDYJENNIFER L. ESPOSITO HOMENDY, age 46, is Democratic staff director for the House Subcommittee on Railroads, Pipelines and Hazardous Materials. She is said to be seeking a nomination to the National Transportation Safety Board, but insiders say an STB nomination is not to be ruled out.

Her professional career includes a post-college internship with Sen. Arlen Specter (D-Pa.), and almost a decade in government affairs posts with the Federation of Independent Business, the Iron & Steel Institute, the Transportation Trades Department of the AFL-CIO, and the Teamsters Union.

In 2004, Homendy moved to her senior House staff position where she interacts with lobbyists representing railroads, pipelines, rail suppliers and rail shippers. She advises subcommittee Democrats on issues of railroad and pipeline economics and safety, as well as funding for Amtrak and higher-speed rail passenger service. She was a primary co-author of the 2008 Rail Safety Improvement Act when Rep. James Oberstar (D-Minn.) chaired the Transportation & Infrastructure Committee.

Homendy earned an undergraduate degree in humanities from Penn State University.

WILLIAM CLYBURNWILLIAM CLYBURN JR., age 51, is a former Democratic member of STB, having received from President Clinton a recess appointment in December 1998 after the Senate Republican leadership blocked a confirmation vote on his earlier nomination because it wasn’t paired with a Republican nominee. It was only the fourth recess appointment in the 130-year history of the STB and its ICC predecessor.

While Clyburn’s recess appointment to the STB was effective through December 1999, President Clinton renominated him in January 1998, along with Republican Wayne O. Burkes, and the two were subsequently jointly confirmed by the Senate—Clyburn for a term expiring Dec. 31, 2000. He remained into a statutory holdover year, departing at year-end 2001.

While at the STB, Clyburn participated in decisions authorizing the partitioning of Conrail between CSX and Norfolk Southern, the acquisition by Canadian National Railway of Illinois Central, and participated in creating new railroad merger rules drafted by the late STB Chairman Linda Morgan.

In recent years, Clyburn has been a Washington lobbyist, whose clients have included Norfolk Southern, although the main focus of his practice is education and fund raising. Early in his career, he served as a law clerk to federal appellate court Judge Rodney A. Peeples, as a legislative aide to former Sen. Chuck Robb (D-Va.), and as an attorney with the Senate Commerce Committee when chaired by Sen. Fritz Hollings (D-S.C.).

Clyburn earned an undergraduate degree in ceramic engineering from Georgia Tech, and a law degree from the University of South Carolina.

If nominated and confirmed, Clyburn would be only the third STB/ICC member to return following a break in service—the other two having been Democrats Jacob J. (Jake) Simmons and Dan Elliott.

SARAH FEINBERGSARAH FEINBERG, age 40, was named by President Obama as Acting Federal Railroad Administrator in January 2015, following the hasty departure of Joseph Szabo during a period of internal turmoil at the agency made more difficult by a series of rail accidents involving crude oil hauled in rail tank cars.

She was Senate-confirmed in October 2015, and departed upon the inauguration of President Trump in January 2017.

Occasionally, her lack of knowledge of railroad operations and technology—her strength is in policy formulation—caused her to stumble. In supporting mandatory implementation of electronically controlled pneumatic (ECP) brakes, Feinberg mistakenly intimated that conventional air braking technology is unsafe, terming it a “Civil War-era braking system.” On Dec. 4, following a National Academy of Sciences report that DOT’s approach in mandating ECP brakes over other technologies was “incomplete and unconvincing,” the DOT repealed an implementation mandate rulemaking.

A former chief of staff to Democratic Transportation Secretary Anthony Foxx, and previously a senior adviser to White House Chief of Staff Rahm Emanuel, Feinberg is considered a rising Democratic star more suited to, and desirous of, higher profile positions. At present, she is a new mother with an emerging public policy consulting practice.

Frank N. Wilner, Contributing Editor

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.

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